Tim Wojs

Tim Wojs asked about the performance of volumes relative to expectations, seeking a breakdown of the impact from tariffs versus price elasticity, and inquired about the anticipated price-to-volume trade-off in the upcoming quarters.

Answer

Chris Nelson, President and CEO, stated that volumes were largely in line with expectations, with some tapering towards the end of Q3 due to a non-standard promotional window. He noted Q4 would return to a normal promotional calendar and described the environment as stable but challenging.

Tim Wojs asked about the performance of volumes relative to expectations, seeking a breakdown of volume impact from tariffs and observed price elasticity. He also inquired about the expected continuation of the one-for-one trade-off between price and volume in the coming quarters.

Answer

President and CEO Chris Nelson stated that volumes were relatively in line with expectations, with some tapering towards the end of Q3 due to a non-standard promotional window. He anticipates a similar environment in Q4, with a return to a more normal promotional calendar for the holiday season, noting the environment is challenging but stable.

Tim Wojs from Robert W. Baird & Co. requested details on how recent pricing increases are tracking against expectations, including any observed demand elasticity and the outlook for pricing in the second half of the year.

Answer

COO, EVP and President of Tools & Outdoor Christopher J. Nelson confirmed the initial price increase was implemented as planned with no significant change in demand patterns, noting a roughly one-for-one price-to-volume elasticity. He announced a second, more modest price increase is planned for early Q4. CFO Patrick D. Hallinan added that the Tools & Outdoor segment would see a high-single-digit price benefit in the back half, offset by a similar volume decline.

Tim Wojs asked about the impact of destocking in the third and fourth quarters of 2025 and whether Carlisle Companies Incorporated expects to enter 2026 with clean channel inventory.

Answer

Chris Koch, Chair, President, and CEO, explained that Q4 and Q1 are typically the lightest quarters with normal seasonal inventory reductions. He noted that the Q4 market survey indicated normal seasonal patterns (1.5 to 2 months) for destocking, with a 'little bit more' due to M&A turmoil at certain distributors. He anticipates this could be a positive for Q2 2026 if macroeconomic issues and new construction demand improve.

Tim Wojs from Baird inquired about the impact of destocking in the third and fourth quarters, the factors driving channel partners' destocking activities, and whether Carlisle anticipates entering 2026 with normalized channel inventory levels.

Answer

Chris Koch, Chair, President, and CEO of Carlisle Companies Incorporated, explained that Q4 and Q1 typically see normal seasonal inventory reductions. He noted that while there might have been slightly more destocking due to M&A integration turmoil at certain distributors, overall, no major impact was observed. Koch suggested that if macroeconomic issues resolve and new construction demand improves in 2026, a clean slate could be a positive for Q2.

Tim Wojs asked about the primary drivers for Simpson Manufacturing's cost reductions, the expected trajectory of gross margins, when tariffs are anticipated to fully flow through, and any noticeable impact from the new Gallatin facility. He also inquired about the volume trajectory in North America and the expectation for outperforming market declines, later following up on carryover pricing for 2026, the Q4 EBIT margin guide, and clarifying the $30 million annualized savings.

Answer

CEO Mike Olosky stated that cost reductions are a response to the market slowdown and an anticipated flat year in 2026, aiming to maintain the 20% operating margin. CFO Matt Dunn added that the Gallatin facility won't have a noticeable short-term gross margin impact, with tariff impacts primarily affecting concrete products and expected to fully flow through by Q1 2026, with 80% already reflected in Q3. Mr. Olosky noted North American volume was down 2.7% in Q3 versus the prior quarter, with a year-to-date decline of 1.4%, indicating a worsening trajectory, but reiterated the ambition to grow above market. Regarding pricing, Mr. Olosky mentioned $100 million in annualized tariff-specific price increases and $50 million for U.S.-made products. Mr. Dunn detailed $30 million in Q3 pricing, an estimated $25 million in Q4, and $30-35 million carryover into 2026. Mr. Dunn indicated Q4 EBIT margin variability largely depends on volume. Both executives confirmed the $30 million annualized savings are in addition to severance costs.

Tim Wojs inquired about the primary drivers for Simpson Manufacturing Company's recent cost reductions, specifically whether it was due to an expectation of a prolonged slower housing market. He also asked about the timeline for tariffs to fully impact gross margins, any noticeable effects from the new Gallatin facility, and the company's volume trajectory expectations for early next year.

Answer

Mike Olosky, President and CEO, confirmed that the cost reductions align with expectations of a slower market, noting a deceleration in the second half of the year and a projected flat market for 2026. Matt Dunn, CFO, added that these actions aim to maintain the 20% operating margin ambition. Mr. Dunn stated that the Gallatin facility would not have a noticeable short-term impact on gross margins, and that tariffs, primarily affecting concrete products, are expected to cause gross margin erosion over the next couple of quarters, with about 80% already reflected in Q3. Mr. Olosky indicated that Q3 North American volume was down 2.7% versus the prior quarter, with a worsening trajectory, but reiterated the ambition to outperform the market.

Tim Wojs asked about the evolution of spec content, comparing current trends to three years ago, particularly regarding electronics adoption and the impact of recent ancillary product M&A. He also inquired about the International segment's PPII (price, productivity, inflation, investment) turning negative in Q3, asking if it was a timing issue or indicative of broader trends.

Answer

President and CEO John Stone highlighted accelerating electronics adoption in specs and the positive impact of new non-residential product launches. He noted emerging opportunities for complementary software in multifamily applications and the strong fit of recent acquisitions like Krueger Specialty Products and Trimco with Allegion's spec engine. Regarding International PPII, Mr. Stone clarified that the Q3 negative figure was minor, and on a year-to-date basis, inflationary pressures have been essentially covered, suggesting it was not a significant trend.

Tim Wojs inquired about the International segment's Price, Productivity, Inflation, and Investment (PPII) turning negative this quarter, asking if it was a timing issue or indicated underlying concerns.

Answer

President and CEO John Stone clarified that while PPII was slightly negative in Q3, the year-to-date figure for the International segment is essentially covered (approximately negative $1 million). He advised against over-interpreting the Q3 figure, suggesting that the year-to-date rate provides a better indication of their success in managing inflationary pressures.

Tim Wojs from Baird asked about key milestones for integrating Acuity Intelligent Spaces (AIS) components like QSC, Distech, and Atrius into a more comprehensive solution. He also sought clarification on the low single-digit sales growth guidance for Acuity Brands Lighting (ABL) in fiscal 2026, specifically regarding the impact of pricing actions related to tariffs, and the implied adjusted EBIT margin for the company.

Answer

Neil Ashe, Chairman, President, and CEO, Acuity, outlined milestones for AIS, including continued organic development of each business, commingling of products, and future end-user recognition of new capabilities. Karen Holcom, SVP and CFO, Acuity, explained that ABL's strategic pricing actions, in the low to mid-single digits, aimed to offset the dollar impact of tariffs. Mr. Ashe highlighted the dramatic margin improvement in the lighting business and new segment-level margin disclosure.

Tim Wojs of Robert W. Baird & Co. asked for an assessment of channel inventory levels for the Attachments segment compared to historical norms, the drivers of favorable mix in the Solutions segment, and the magnitude of price realization.

Answer

President and CEO Mark Van Genderen described company-owned inventory as being in 'very, very good shape.' He noted dealer plow inventory has improved and is close to ideal, while hopper and spreader inventory is right where it should be. EVP & CFO Sarah Lauber explained the favorable mix in Solutions was driven by specific, higher-margin municipal contracts in the first half. She also confirmed that price realization for both segments is in the low single-digit range.

Tim Wojs of Baird inquired about the financial impact of reversed aluminum tariffs and the company's strategy for potential future tariffs. He also asked about the backlog conversion rate and sought an update on the vinyl product ramp.

Answer

Executive Santiago Giraldo confirmed the company will receive a full refund for paid tariffs in Q4 and stated that future tariffs would likely be passed on to customers. He also explained that backlog conversion is extending due to larger projects but that growth is still expected. He noted the vinyl product ramp is progressing with a full product line now available and should be a meaningful contributor next year.